Hang Lung faces dwindling appeal

PUBLISHED : Sunday, 01 October, 1995, 12:00am
UPDATED : Sunday, 01 October, 1995, 12:00am

Hang Lung Development Recommendation: Sell Brokerage: Seapower Research HANG Lung Development, the fourth-largest listed property company in Hong Kong, has suffered from poor property sales in the second half of the 1995 financial year and a mild decline in its net profit is envisaged.

Hang Lung's land bank is dwindling and only limited sites at relatively high acquisition costs are reserved for future development. Most are in unfavourable locations.

The counter trades at a prospective price-earnings ratio of about 3.3 but this is not a bargain due to its diminishing prospects. A small discount to market net asset value also reduces its attractiveness.

Techtronic Industries Recommendation: Buy Brokerage: Dharmala Securities TECHTRONIC designs, manufactures and distributes rechargeable power tools and other electrical appliances for domestic and light industrial uses.

For the first half of the 1995 financial year, the company reported an 18 per cent growth in net profit and an 18 per cent growth in operating profit, both above expectations.

With new products already contributing to profits and orders on hand until February 1996, this high level of growth should be sustained.

Trading at a prospective price-earnings ratio of 3.8 for financial year 1995 and 3.1 for financial year 1996, the counter is a bargain.

Henderson Investment Recommendation: Buy Brokerage: Sun Hung Kai Research HENDERSON Investment, a company active in property investment and development, trading and retailing, is expected to report a strong 48.9 per cent increase in earnings for the year to June.

Property development profit is forecast to be a solid $951 million, from sales of Hang Bong Commercial Centre, New Trend Centre and Tak Lee Court.

Strong upward rental revisions on the group's investment properties are also expected as most of the leases were renewed last year.

Trading at a 21 per cent discount to appraised net asset value, the counter remains a buy.